Schooled in Northern ambition

The director of Manchester Business School explains his plans for global success

Manchester as a city has never been ranked second to anywhere. It's splendid Victorian industrial past and its trendy revitalised present has allowed it to escape damaging comparisons with London. But when it comes to its business school the story is less straightforward.

Founded in the Sixties at the same time as the London Business School, the Manchester Business School (MBS) has had to deal with the inevitable rise of its capital rival. It finds itself now jostling for position in the provincial super-league of schools like Warwick, Cranfield or Lancaster. But the new merger of Manchester University and UMIST (University of Manchester Institute of Science and Technology) has given it a rare second chance to really shine.

Professor John Arnold is director of the merged school, which brings together three parts of the old University of Manchester (MBS, the school of accounting and finance, and the institute of innovation research) with UMIST's school of management. With more than 200 faculty and 2,400 students it is the UK's biggest campus-based business and management school.

Professor Arnold headed MBS for a decade. Looking out over the city from his office in the heart of Manchester's thriving city-centre academic quarter he is not short on ambition for an institution usually ranked in the world's top 50: "A realistic target for the next five years is to be able to say we are now clearly ahead of Warwick and Oxford."

On top of that, Professor Arnold's ambition to move out of the merger phase in early 2005 seems extremely ambitious. But he is clearly up for the fight and is not going to waste time on competing with London - "a US-style business school" - which he puts in a class of its own in the UK. "It's among the top 10 business schools in the world and no one else in the UK is. I don't think we can aspire to that in the foreseeable future - our vision is the top 20 or 25."

He may not compete with London Business School but he prizes one of its great assets: independence. Here the new director is pitching to reap two sets of contradictory benefits. On one hand he wants a university-based full-service business school able to interact with other disciplines (like economics and law) and plug into exploiting intellectual property (in areas like the sciences and medicine), while also creating a distinct corporate identity and freedom of action. He says he has the university's backing for such status - evidenced by the school's branding. Looking worldwide he cites the Wharton School at Pennsylvania University - the oldest in the US - as a model.

Which brings the director to his biggest challenge - staff. "You're right that we don't have enough international big hitters," he says. The new university plans to grow - or recruit - five-10 Nobel prize winners by 2015. Professor Arnold has created a standing committee with the remit to spot intellectual ripe fruit in the market. "We will pay large salaries if we need to - and it might be a question of bringing in a half dozen strong team with them," he says.

But why did the new school fail in its high-profile bid to bring in a new dean for the re-launch? Professor Arnold reveals that they did shortlist two applicants - both US deans - but they were at schools no better rated than MBS. He says inside knowledge is now crucial in knocking together the differing cultures of UMIST and Manchester. The new MBS contains several fault lines - principally between graduate and undergraduate teaching traditions, and market-orientated and academic research. The decision to put him in charge for MBS's launch is seen as smart - certainly better than appointing someone from outside just to save face.

One reason Professor Arnold has good reason to be upbeat is the new financial basis of MBS. "We had a business model before that was the opposite we would have recommended to any business," he admits. It combined volatile income from MBA and executive programmes with fixed costs. Now he has the bedrock of an assured income from undergraduates, with the bonus of top-up fees looming.

The size and financial strength of the new school brings two big strategic benefits: creating capacity to invest in the site, and the programmes taught. Initially he has £2m to spend on the "block" but needs £5m-£10m to finish. But even then he does not think the school would be fit for senior executives. He plans a £25m-£30m executive centre, possibly with partners such as a hotel chain. MBS will have to set an example within the new university in fund-raising and sponsorship.

For MBA students he promises more electives, tougher entrance standards, greater variety of lecturers, and a continuation of the "Manchester method" of teaching, using live projects and, above all, the same tight-knit fairly small student cohort. At present there is a maximum capacity of 140 - this year it is 92, last year 120. The new merged school gives him the chance to expand popular specialist Masters and executive programmes.

Prices of popular courses outside the MBA may go up - possibly in 2005, or the following year. Manchester's trademark 18-month MBA programme may change - if only for some students. Professor Arnold can envisage distance learning replacing the first half of the course - the core skills - and the second being worked up into a one-year MBA.

But what kind of business school will these students enter? What is that elusive brand? "We have always seen ourselves as innovative, entrepreneurial, creative - even quirky in some ways," he says, adding that this now chimes well with the city's recent successes on the global stage - Manchester United's rise, the Commonwealth Games, the Olympic bids, and the huge growth in creative-, technological- and service-based industries in the region. All of which has helped fuel the regeneration of the city itself. Professor Arnold believes MBS now has a real chance to be part of that success story.